Optiv Trading India Private Limited Vs Commissioner of Commercial Taxes (GSTAT Bengaluru)
Summary: The Goods and Services Tax Appellate Tribunal, Bengaluru Bench, allowed the appeal of Optiv Trading India Private Limited against a demand for reversal of ₹61,85,093 of IGST input tax credit for FY 2018-19, together with interest under Section 50 and penalty under Section 73(9). The demand arose from comparing credit availed in GSTR-3B with the figures appearing in GSTR-2A, without accounting for amendment entries relating to FY 2018-19 that appeared in July 2019.
The company explained that ₹81,08,000 of relevant credit appeared in the B2BA amendment table for July 2019. It submitted invoice-wise reconciliation and argued that the statutory conditions in Section 16 applicable in FY 2018-19 did not require exact matching with GSTR-2A. The adjudicating authority had considered the ordinary B2B table rather than the amendment table, while the first appellate authority dismissed its appeal for non-appearance without deciding the written grounds.
The Tribunal held that Section 107(11) and (12) required the first appellate authority to examine the written submissions and give a reasoned decision even if the appellant did not attend hearings. It also considered the historical scope of Rule 36(4), Section 16(2)(aa), CBIC Circular No. 183/15/2022-GST and the distinction between a mismatch calling for verification and proof of ineligible credit. At the Tribunal hearing, the departmental representative acknowledged after verification of updated returns and the July 2019 amendment table that no excess IGST credit had been taken.
On the verified reconciliation, the Tribunal concluded that the alleged excess credit was not established. It set aside the adjudication order dated 6 April 2024 and appellate order dated 18 August 2025, cancelled the ₹61,85,093 ITC reversal demand and consequential interest and penalty, and granted consequential relief. The appeal was allowed without remand by the order dated 12 November 2026.
Cases Discussed
- Purushottam Stores v. State of Bihar — 2023 (75) G.S.T.L. 276 (Patna)
- St. Antony Trading and Transport Pvt. Ltd. v. Joint Commissioner (Appeals) — 2025 (4) TMI 1153 (Kerala)
- SFC Global Commodity Pvt. Ltd. v. Union of India — (2026) 41 Centax 264 (Guj.)
- Shatrughan Shaw v. Assistant Commissioner of State Tax — (2025) 37 Centax 148 (Cal.)
- BA Continuum India Pvt. Ltd. v. State of Maharashtra — WP No. 3598 of 2026 (Bom.)
- A.R. Associates v. Commissioner of Commercial Taxes — (2001) 122 STC 134 (Kar)
- Commissioner of Income Tax (Central) v. B.N. Bhattacharjee and Ors — (1979) 118 ITR 461 (SC)
- Chemipol v. Union of India — 2009 (244) ELT 497 (Bom.)
- Satyanarayana & Others v. CIT — ITA Nos. 298 & 299/Vizag/2012
- Siemens Engineering & Manufacturing Co. of India Ltd. v. Union of India — (1976) 2 SCC 981
- S.N. Mukherjee v. Union of India — (1990) 4 SCC 594
- Kranti Associates Pvt. Ltd. v. Masood Ahmed Khan — (2010) 9 SCC 496
- Assistant Commissioner, Commercial Tax Department v. Shukla & Brothers — (2010) 4 SCC 785
- Diya Agencies v. State Tax Officer — WP(C) No. 29769 of 2023
- Goparaj Gopalkrishnan Pillai v. State Tax Officer — WP(C) No. 29855 of 2023
FULL TEXT OF THE ORDER OF GSTAT BENGALURU
1.1 The dispute originates from the scrutiny of the input tax credit availed in FORM GSTR- 3B and the input tax credit available in auto-drafted FORM GSTR-2A for the FY 2018-19. The Respondent treated the difference of Rs. 61,85,093 as excess ITC under the head IGST. The appellant’s case is that the comparison relied upon incomplete data and omitted ITC of Rs. 81,08,000 relating to FY 2018-19 that was subsequently reflected in the B2BA (amendment) table of GSTR-2A for July 2019.
2.1 The present Appeal is filed by M/s Optiv Trading India Private Limited (Appellant) under Section 112(1) of the Central Goods and Services Tax Act, 2017 as amended from time to time (CGST Act) / Karnataka Goods and Services Tax Act, 2017 as amended from time to time (KGST Act) read with Section 20 of the Integrated Goods and Services Tax Act, 2017 (IGST Act), the demand being under the IGST head (together hereinafter referred to as ‘the Act’. It challenges the Order No. GST.AP.313/2024-25 dated 18 August 2025 (hereinafter referred to as ‘impugned order’) passed by the Joint Commissioner of Commercial Taxes (Appeals – 5), Bengaluru (hereinafter referred to as ‘Appellate Authority’). The impugned order dismissed the Appeal, for non-prosecution, filed by the Appellant that challenged the Order of Adjudication dated 6 April 2024 (hereinafter referred to as ‘Adjudication order’) passed by the Deputy Commissioner of Commercial Taxes, (Audit)-5.6, DGSTO-5, Bengaluru (hereinafter referred to as ‘Adjudicating Officer’). The Appeal pertains to tax period April 2018 to March 2019.
2.2 The appellant is a Private Limited Company engaged in trading of hardware, software and network related equipment. The Appellant has its Principal place of business at Bengaluru in Karnataka and is registered under the provisions of GST with GSTIN 29AACCO5106C7ZN.
2.3 An audit of accounts of the Appellant for the financial year 2018-19 was conducted during June 2022. The Final Audit Report was issued in no. DCCT(A)-5.6/DGSTO.5/ Audit/No.12(2018-19)/09/2023-24 dated 12.12.2023 in FORM GST ADT-02 under Section 65(6) of the Act. It was observed in Audit that the Appellant had claimed excess Input Tax Credit under the head IGST of Rs 61,85,093 in GSTR-3B as compared to the ITC available in GSTR-2A for the period April 2018-March 2019. The Audit Report records that the Appellant did not reply to the audit observations.
2.4 An intimation in FORM GST DRC-0IA bearing reference No. ZD2912230428088 dated 15.12.2023 demanding the excess ITC as observed in audit was issued to the Appellant. The Appellant did not discharge the liability. Consequently, Show Cause Notice bearing No DCCT(A)-5.6/DGSTO.5/Adj-73/No.160(2018-19)/2/2023-24 dated 30.12.2023 was issued under Section 73 of the Act along with summary in FORM GST DRC-01 bearing reference No. ZD291223101348M dated 30.12.2023.
2.5 Reply to SCN was furnished in FORM GST DRC-06 on 02.02.2024. It was contested by the Appellant that the proposed demand for reversal of excess ITC availed as alleged in the SCN was not valid legally as well as factually. It was submitted that the proposed demand for reversal of ITC of Rs. 61,85,093 under IGST was identified on comparison between the total ITC availed in GSTR 3B against the total ITC available in the auto-drafted Form GSTR 2A for the year 2018-19; excess ITC determined on comparison of GSTR 3B with Form GSTR 2A cannot be considered as ITC availed in violation of the provisions of Section 16 of CGST Act, 2017. It was submitted that merely on the ground that such ITC was not reflected in GSTR 2A could not be considered as ITC claimed in violation of Section 16 of CGST Act, 2017 since all the IGST input tax credit claimed by the taxpayer is reflecting in updated GSTR 2A of the tax period April 2018 to September 2019. They had also submitted copy of invoice wise details of IGST ITC claimed by them along with the details of corresponding month of GSTR 2A in which such invoice was reflected to substantiate that there was no excess claim of ITC under the head of IGST during the period. In the summary of that reply, the Appellant stated that out of the IGST ITC of Rs. 1,77,96,845 claimed, Rs. 96,88,845 was reflected in GSTR-2A of FY 2018-19 and Rs. 81,08,000 in GSTR-2A of FY 2019-20.
2.6 The Order of Adjudication was passed by the Adjudicating Officer and communicated vide No. DCCT(A)-5.6/ DGSTO.5/Adj-73/No. 160(2018-19)/4/2023-24 dated 06.04.2024 along with summary in FORM GST DRC-07 (Ref. No. ZD2904240173779). The demand along with in interest and penalty as proposed in the notice was confirmed. The reason given was that the B2B table of FORM GSTR-2A for July 2019 showed IGST of only Rs. 1,71,086 and therefore the statement submitted by the Appellant failed to support the submissions that the IGST ITC were available in the Form GSTR 2A. The Appellant did not attend the personal hearings fixed on 16.01.2024 and 03.02.2024.
Proceedings before the First Appellate Authority
2.7 An appeal was preferred before the First Appellate Authority under Section 107 of the Act on 21.05.2024. It was reiterated in the Appeal in Form GST APL 01 that the ITC claimed by the Appellant under IGST head amounting to Rs. 1,77,96,845/- in FY 2018-19 was on the basis of ITC reflecting in FORM GSTR-2A for the FY 2018-19 and part ITC reflecting in the B2BA (Amendment Table) of GSTR-2A for the month of July 2019. Reconciliation table also was produced as exhibit to the Appeal to substantiate their claim. It was also relied by the Appellant on the Press Release issued by CBIC dated 18 October 2018 and Circular 183/15/2022-GST dated 27 December 2022 and contested the legality of relying on the Form GSTR 2A to determine the availability of ITC.
2.8 Appellate Authority vide Impugned order dated 18.08.2025 (summary in FORM GST APL-04 dated 21.08.2025), proceeded to dismiss the Appeal filed by the Appellant challenging the Adjudication Order on the ground that the Appellant had failed to avail the opportunity of personal hearings and adduce necessary documentary evidences for completion of the Appeal proceedings.
2.9 The present appeal was filed on 20th March 2026. In the meanwhile, on 29th August 2025, the Appellant made the pre-deposit of Rs. 6,18,510 under Section 112(8) of the Act (debit entry DI2908250415190 in the Electronic Credit Ledger) in compliance with the Circular No. 224/18/2024-GST dated 11 July 2024, filed an undertaking before the Deputy Commissioner of Commercial Taxes, DGSTO-5, Bangalore, Karnataka that it would file an appeal before the GSTAT once it became operational. Copy of Electronic Liability Ledger substantiating the payment of mandatory 10% Pre-deposit was also enclosed with the letter.
2.10 The Appellant is before us against the impugned Order in Appeal.
Submissions by the Appellant
3.1 Shri Anmol Gupta, Ld Advocate, appeared before us on behalf of the Appellant and prayed to set aside the Order-in-Appeal, along with demand of reversal of ITC under IGST of Rs. 61,85,093, interest under Section 50 and penalty of Rs. 6,18,509 under Section 73(9) of the Act. Additional written submissions dated 22.09.2026 were filed after the hearing on 21.09.2026, with an updated FORM GSTR-2A of FY 2018-19 downloaded on 21.09.2026 and FORM GSTR-3B for July 2019.
3.2 It was submitted by the Ld Advocate that the appellate authority dismissed the Appeal mainly because the appellant did not attend the personal hearings fixed on three occasions. The impugned order, however, failed to examine the written submissions, reconciliation statements, documentary evidence, and case laws filed with the first appeal. Section 75(6) and Section 107(12) of the Act requires a reasoned order setting out relevant facts and the basis of the decision. Failure to attend the personal hearing fixed by the Appellate authority cannot justify ignoring the records submitted. The authorities cited for dismissal due to non-prosecution are distinguishable or inapplicable. Reliance was placed on Purushottam Stores v. State of Bihar, 2023 (75) G.S.T.L. 276 (Patna), St. Antony Trading and Transport Pvt. Ltd. v. Joint Commissioner (Appeals), 2025 (4) TMI 1153 (Kerala), SFC Global Commodity Pvt. Ltd. v. Union of India, (2026) 41 Centax 264 (Guj.), Shatrughan Shaw v. Assistant Commissioner of State Tax, (2025) 37 Centax 148 (Cal.) and BA Continuum India Pvt. Ltd. v. State of Maharashtra, WP No. 3598 of 2026 (Bom.).
3.3 It was further submitted that the Adjudication Order confirmed excess ITC under IGST of Rs. 61,85,093 by comparing GSTR-3B with GSTR-2A for FY 2018-19. The comparison however did not consider the total ITC of Rs. 81,08,000 pertaining to FY 2018-19 later appeared in the July 2019 B2BA amendment table of GSTR-2A. It was submitted that the ITC claimed in GSTR-3B of Rs. 1,77,96,845 should have been compared with updated Form GSTR 2A for the FY 2018-19 which has total IGST credit of Rs. 1,97,19,750. The Appellant therefore claimed short availment of Rs. 19,22,905, not excess availment. Ld Advocate further submitted that the adjudicating authority considered only the July 2019 B2B data, showing Rs. 1,71,086 under IGST, while overlooking the separate B2BA amendment entries. It was submitted that the ITC of July 2019 availed in FORM GSTR-3B under the IGST head was only Rs. 3,34,196.57, that supported the submission that credit of the B2BA invoices was not availed a second time.
3.4 It was also submitted by the Ld Advocate that at no point of time the list of invoices against which ITC was availed in GSTR 3B, but not available in GSTR 2A for the year 2018- 19 were shared with the Appellant for examination. The objection was only based on the difference in total ITC availed GSTR 3B versus total ITC available in GSTR 2A under different heads, which made verification impossible.
3.5 The Ld Advocate further maintained that ITC was claimed on valid invoices and in compliance with conditions of Section 16 of the Act such as possession of invoices, receipt of supply, payment of tax, and filing of returns. Form GSTR-2A was stated to be unavailable or only facilitative during the initial GST period. The CBIC’s 18 October 2018 press release was cited in support. The GSTR-2A-based restriction in Rule 36(4) was introduced prospectively from October 2019, and Section 16(2) (aa) only from January 2022. Neither it was argued, can be applied to FY 2018-19.
3.6 It was submitted that, as there was no wrongful availment or utilisation of ITC, there was no tax liability and the consequential interest could not survive. In the alternative, the Appellant sought waiver of interest for 22 November 2025 to 18 December 2025, when filing before GSTAT was allegedly unavailable because of the Tribunal’s non-constitution and the staggered filing arrangement.
3.7 The Ld Advocate further submitted that without excess ITC, unpaid tax, or short-paid tax, the 10% IGST penalty of Rs. 6,18,509 had no foundation.
Submissions by the Respondent
3.8 Mrs. Priya Basappa, Deputy Commissioner and Authorised Representative (Ld DR) for the Respondent appeared before us at the first hearing on 21st September 2026 and submitted that the Appellant did not appear before the First Appellate Authority even after fixing personal hearings on 28.01.2025, 11.03.2025, and 08.07.2025 as provided under Section 107(8) of the Act, vide notices dated 13.01.2025, 28.02.2025 and 12.05.2025. Their presence was very much required to adduce the necessary documentary evidences in completing the appeal proceedings. They failed in their responsibility, which shows that the Appellant did not want to pursue the appeal. Therefore, the Appellate Authority was right in dismissing the Appeal filed by the Appellant.
3.9 When the statements and documents filed by the Appellant before the lower authorities and before this Tribunal were brought to the notice of the Ld DR, time was sought to verify them. On 30th September when the matter was called for further hearing, it was submitted by the Ld DR that after verification of updated GSTR 2A and GSTR 3B for the year 2018-19, B2BA (Amendment) and GSTR 3B for the month of July 2019, they could ascertain that there was no excess input tax credit under IGST head as against the amount confirmed in the Adjudication Order.
Issues under consideration
4.1 We have heard both the parties and gone through the appeal papers and documents submitted and considered the matter.
4.2 The issues to be decided in this matter are:
(i) Whether the First Appellate Authority is right in dismissing the Appeal filed by the Appellant for its failure to utilise the opportunity of personal hearings extended to them and to defend their case appropriately?
(ii) Whether for the FY 2018-19, the excess ITC availed in Form GSTR 3B as compared to the ITC available in Form GSTR 2A, can be disallowed treating such amount of ITC as not available under Section 16 of the Act?
(iii) Whether the documents submitted before the Adjudicating Authority, First Appellate Authority and before this Tribunal are sufficient enough to establish that there was no excess Input Tax Credit availed in GSTR 3B in total during the period April 2018 to March 2019 as compared to the details in Form GSTR 2A?
(iv) Whether the Appellant is entitled to waiver of interest under Section 50 of the Act for the period from 22.11.2025 to 18.12.2025, when the filing of appeals before this Tribunal was regulated by the staggered filing order?
(v) What relief should follow?
Discussion and decision
5.1 The first issue is to examine the correctness of dismissal of the Appeal for non- prosecution. The impugned order dismissed the Appeal filed by the Appellant on the ground that the Appellant failed to appear before Appellate Authority and adduce the necessary documentary evidences in completing the appeal proceedings. The effect of the dismissal of the Appeal filed by the Appellant is that the demand confirmed in the Order of Adjudication would sustain along with interest and penalty.
5.2 We have observed that notices were issued to the Appellant vide reference No. ZD2901250438482 dated 13.01.2025, No. ZD290225120482M dated 28.02.2025, No. ZD2905250348419 dated 12.05.2025 fixing the personal hearing on 28 January 2025, 11 March 2025, and 08 July 2025 respectively in compliance to the provisions under Section 107(8) of the Act with sufficient time for preparation for the Appellant. The Appellant did not appear before the First Appellate Authority. It was recorded in the impugned order that their presence was very much required to adduce the necessary documentary evidences in completing the appeal proceedings, but the Appellant failed in their responsibility. It was also noted in the impugned order that failure to attend the personal hearing showed that the Appellant did not want to pursue the appeal. No adjournment was sought by the Appellant on any of these dates; the limit of three adjournments under Section 107(9) therefore did not arise. The Appeal thereafter dismissed on the grounds of default of appearance.
5.3 Sub-Section (11) of the Section 107 of the Act provides that the Appellate Authority may pass an order confirming, modifying or annulling the decision or order appealed against. The Sub-Section reads: The Appellate Authority shall, after making such further inquiry as may be necessary, pass such order, as it thinks just and proper, confirming, modifying or annulling the decision or order appealed against but shall not refer the case back to the adjudicating authority that passed the said decision or order: Provided …..
5.4 Further, Sub-section (12) of Section 107 of the Act provides that the Order should state the points for determination, the decision thereon and the reasons for such decision. Sub-rule reads:
(12) The order of the Appellate Authority disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for such decision.
5.5 Therefore, even where the Appellant did not appear, the Appellate Authority should have given its findings on the grounds in the Appeal and examined the supporting documents submitted along with the appeal and passed a speaking order which was not done in this case.
5.6 The decisions cited in the order support only a finding on non-prosecution in their own procedural settings; they do not override the appellate authority’s statutory duty under Section 107(11) and (12) of the Act to pass a reasoned decision on the merits of the appeal.
5.7 The cited proposition in the case of A.R. Associates v. Commissioner of Commercial Taxes (2001), decided by the Hon’ble High Court of Karnataka on 02.01.2001 reported in (2001) 122 STC 134 (Kar) concerns the consequence of not producing evidence at the requisite stage before the tax authorities. In that case the assessee neither appeared before the Revisional Authority nor produced any material. Here, however, the appellant had already filed a detailed appeal including its DRC-06 reply, statutory grounds under Section 16 and an ITC reconciliation statement and B2BA (amendment). Therefore, this is not a case where no evidence existed or was withheld. The appellate authority was required to assess the material already on record and identify any specific deficiency. A general statement that the appellant did not “adduce necessary documentary evidence” cannot replace an examination of the documents and grounds filed.
5.8 The decision of the Honourable Supreme Court in Commissioner of lncome Tax (Central) Vs. B.N. Bhattacharjee and Ors [1979] 118 ITR 461 (SC) was relied upon to emphasises the importance of effectively pursuing the appeal filed. That case arose under the Settlement Commission provisions of the Income Tax Act, 1961, where the question was whether an appeal withdrawn before adjudication bars an application under Chapter XIX-A. The observation that an appeal must be effectively pursued cannot be read as authorising dismissal of a statutory GST appeal merely because the Appellant did not attend oral hearings, particularly where written grounds and supporting material were filed. More importantly, the appellate mechanism under Section 107 is distinct from the procedural context of the cited income-tax decision. Section 107(12) requires the appellate authority to state the points for determination, the decision on those points, and the reasons for the decision. The order contains no merits determination of the ITC claim, the GSTR-2A reconciliation, applicability or otherwise of Circular No. 183/15/2022-GST, interest, or penalty.
5.9 The decision of Honourable High Court of Mumbai in the case of M/s Chemipol v. Union of India & Anr, Central Excise Appeal No. 62 of 2009, decided on 17.09.2009, 2009 (244) ELT 497 (Bom), was relied upon for the ‘inherent power’ to dismiss an appeal for non- prosecution. In that case, the High Court set aside the dismissal for non-prosecution and restored the appeal. It was held that the inherent power may be used only where the statute does not require the appeal to be decided on merits, and that where the appellant has filed written submissions, the appeal must be decided on merits on the basis of those submissions. Section 107(12) expressly requires a decision on merits. The decision therefore supports the Appellant. The appellate authority must exercise statutory appellate jurisdiction, not merely dispose of the appeal for absence. If it finds the evidence insufficient, it may reject the grounds on evidence and reasons; it cannot avoid deciding the pleaded issues altogether.
5.10 The decision in the case of Satyanarayana & Others v. CIT, (ITAT Vizag) ITA Nos. 298 & 299/Vizag/2012 order dated 06.11.2015, is an Income-tax Appellate Tribunal order applying its own appellate practice and relying on inherent power to dismiss for non-prosecution. It is not binding on a GST appellate authority. Its reasoning is distinguishable because the present appeal contained substantive written pleadings. The issue was not a bare appeal left wholly unsupported; it was whether the documented FY 2018-19 ITC reconciliation and legal submissions established eligibility. In any event, an ITAT practice of dismissal for default cannot supersede the express statutory requirement in Section 107(12) for a reasoned appellate order.
5.11 The order records three hearing opportunities, but it does not decide the actual grounds raised, such as whether for FY 2018-19 non-reflection in GSTR-2A could by itself deny ITC or whether the claimed ITC was supported by invoices, receipt of supplies, and payment of tax under section 16(2) or whether the ITC of Rs. 81,08,000 relating to FY 2018-19 but reflected through the July 2019 amendment table reconciled the alleged mismatch; or whether the Appellant was right in applying the Circular No. 183/15/2022-GST to reconcile the discrepancy.
5.12 Section 107(11) and (12) of the Act require a reasoned decision on merits. The appellate order merely dismisses the appeal for default of appearance.
5.13 It was held by the Hon’ble Supreme Court in the case of Siemens Engineering & Manufacturing Co. of India Ltd. v. Union of India, (1976) 2 SCC 981, that every quasi-judicial order must be supported by reasons. Reasons are the link between the facts/material and the conclusion, and prevent arbitrary exercise of power. A statement in the impugned order that the appellant “has nothing to defend” is not a reasoned adjudication of the written grounds, evidence, or reconciliation already on record.
5.14 It was held by the Hon’ble Supreme Court in the case of S.N. Mukherjee v. Union of India, (1990) 4 SCC 594, that recording reasons was a component of natural justice. It promotes fairness, enables review, and ensures that the authority has applied its mind to the case. Section 107(12) expressly incorporates this principle. A dismissal without findings on the ITC, interest, and penalty grounds fails the statutory and natural-justice requirement.
5.15 It was reaffirmed by the Hon’ble Supreme Court in the case of Kranti Associates Pvt. Ltd. v. Masood Ahmed Khan, (2010) 9 SCC 496, that reasons are indispensable to judicial and quasi-judicial decision-making. A reasoned order is necessary for transparency, accountability and effective appellate or judicial review. The impugned order does not disclose why the FY 2018-19 reconciliation, the appellant’s section 16 submissions, or CBIC Circular No. 183 were rejected. It is a non-speaking order.
5.16 It was held by the Hon’ble Supreme Court in Assistant Commissioner, Commercial Tax Department v. Shukla & Brothers, (2010) 4 SCC 785, that reasoned orders were essential and that absence of reasons causes prejudice because the affected party cannot understand the basis of the decision or effectively challenge it. The appellant cannot meaningfully contest the dismissal because the authority gave no finding on eligibility of ITC or the basis for sustaining the tax, interest, and penalty.
5.17 The appellate authority could proceed with the appeal after the appellant failed to attend the listed hearings; however, it could not dismiss the statutory appeal solely for default for appearance. Section 107(12) required it to identify the points arising from the written grounds, adjudicate them on the material already on record, and provide reasons for its decisions. The impugned order records only absence at hearings and authorities concerning non-prosecution, but contains no decision on the substantive ITC, interest, or penalty issues. It is consequently a non-speaking order passed in breach of section 107(12) and the principles stated in the above cited decisions.
5.18 It was held by the Hon’ble High Court of Kerala in St. Antony Trading and Transport Pvt. Ltd. (supra), following Purushottam Stores (supra), that in the light of Section 107(12), the Appellate Authority has to consider the matter on merits and is not entitled to dismiss an appeal merely for non-appearance. We must also record that the Appellant did not reply to the audit observations, did not attend the personal hearings before the Adjudicating Authority, and did not appear on any of the three dates fixed by the Appellate Authority. A party that stays away takes the risk that its case is not fully understood. That conduct, however, does not relieve the Appellate Authority of its duty under Section 107(12) of the Act.
5.19 Accordingly, the cited cases can at most justify proceeding without granting further adjournment. They cannot justify a non-speaking dismissal that omits the statutory points for determination, findings, and reasons mandated by Section 107(12) of the Act. Accordingly, the impugned order dismissing the Appeal cannot sustain. Issue (i) is decided in favour of the Appellant.
6.0 As the entire record is before us, and the Revenue has itself verified the figures, we proceed to decide the dispute on merits.
6.1 The second issue is regarding allegation about matching the ITC taken in FORM GSTR-3B as in excess of ITC available in FORM GSTR-2A. The contention of the Appellant in this regard was that availability of ITC taken in GSTR 3B cannot be matched with the ITC available in the Form GSTR 2A during the period April 2018 to March 2019 for the reason that FORM GSTR-2A was not even operational during the period.
6.2 It was further submitted by the Appellant that all the conditions of Section 16 of the Act, as applicable during the period under dispute, had been duly complied with by the Appellant and thus, ITC had been correctly availed. During the period under dispute, no such condition to bar availment of ITC to that reflected in FORM GSTR-2A was there in statute read with rules, in absence of which the reversal of ITC could not have been sought. Such condition was inserted in Rule 36(4) of GST Rules prospectively w.e.f. 30 October 2019. Similar condition was inserted in Section 16(2) (aa) of the Act w.e.f. 01 January 2022.
6.3 It was further submitted by the Appellant that no list of invoice wise ineligible ITC was made available to them either during the Audit or in the SCN. The demand was proposed only based on a comparison of the TOTAL ITC availed in tax period of April 2018 to March 2019 as compared to the month wise TOTAL ITC available in Form GSTR 2A as downloaded by the Audit team in June 2022. Since there were no invoice wise details of defaulted suppliers available, it was submitted by the Appellant that, it was impossible for them to cross verify the eligibility of availment of ITC. The Appellant referred to the Press Release of CBIC dated 18 October 2018 wherein CBIC clarified their position on matching of ITC in GSTR 2A v/s 3B. Para 4 of the Press Release states that the facility to view the supplier’s details in FORM GSTR- 2A is in the nature of taxpayer facilitation and does not impact the ability of the taxpayer to avail ITC on self-assessment basis in consonance with Section 16; it adds that the reconciliation of FORM GSTR-2A with FORM GSTR-3B can be done even after the due date of the return for September 2018. To that extent the Press Release supports the Appellant, though it is not a source of law. The Appellant also relied on the decision of the Hon’ble Kerala High Court in Diya Agencies v. The State Tax Officer [WP(C) No. 29769 of 2023 dated September 12, 2023] and in the case of Goparaj Gopalkrishnan Pillai v. The State Tax Officer – 1, State GST Department and others [W.P.(C). 29855 of 2023 dated 05 October 2023], which are in their favour.
6.4 It is observed from Para 1 of the Audit report dated 12.12.2023 that two tables were made available to the Appellant. Table 1: ‘ITC claimed in GSTR 3B and accrued as per GSTR 2A [as per Report no.4] [GSTR 3B – GSTR 2A]’ which provided the month wise difference of ITC asper GSTR 3B and GSTR 2A. The total ITC in GSTR 3B in excess of ITC in GSTR 2A for the 12 months of FY 2018-19 worked out to Rs 58,64,695. Table 2: Provided the head wise difference of ITC asper GSTR 3B and GSTR 2A for the period April 2018 to March 2019. This shows the Total difference of ITC under IGST of (+) Rs 61,85,093.02, under CGST of (-) Rs 1,60,198.76 and SGST of (-) Rs 1,60,198.76. This was treated as a violation of conditions specified in Section 16 of the Act. Accordingly, the audit observation was issued directing the Appellant to reverse ITC of IGST of Rs 61,85,093. The Audit observation, however, did not provide the details of the invoices against which the ITC of Rs 61,85,093 pertains or which condition under Section 16 of the Act was violated. The Audit Report also records that the Appellant did not reply to the audit observations.
6.5 Subsequently pre-notice consultation intimation in Form DRC 01A was issued followed by Show Cause Notice under Section 73 of the Act by the Deputy Commissioner of Commercial Taxes (Audit) -5.6 DGSTO 5, Bengaluru, on the same lines.
6.6 In reply to the Notice, it was submitted by the Appellant that they have satisfied all the conditions stipulated under Section 16 of the Act and there was no requirement during the FY 2018-19 which restricted the claim of Input tax credit only to the extent of Input tax Credit appearing in the GSTR 2A of the receiver. Though no invoice wise list was provided in the notice served to the Appellant, they had, as per the reply dated 2nd February 2024, shared the copy of invoice wise details of IGST input tax credit claimed by the taxpayer along with the details of corresponding month of GSTR 2A in which such invoice was reflected and soft copy of GSTR 2A generated through common portal for the tax period April 2018 to September 2019.
6.7 The Order of Adjudication passed on 6th April 2024, confirmed the demand as proposed. There was no discussion on which condition under Section 16 of the Act was violated. According to the Adjudicating Officer, the reply was cross-checked with the GSTR-2A for July 2019, which showed total IGST ITC of only Rs 1,71,086; only the B2B table was looked at, and not the B2BA (amendment) table of the same month. However, no adjustment was made from the proposed demand.
6.8 Section 16 of the CGST Act as it stood during the period reads:
16. Eligibility and conditions for taking input tax credit.— (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.
(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,––
(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;
(b) he has received the goods or services or both.
[Explanation.— For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;](prior to 01.02.2019). [Explanation.— For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services––
(i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;
(ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person;] (w.e.f. 01.02.2019)
(c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and
(d) he has furnished the return under section 39:
Provided that where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment:
Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed.
6.9 There are 4 conditions stipulated under Section 16 of the Act for an Assessee to avail the credit of the Tax paid on the goods or service or both received by them.
(i) Possession of tax invoice – Section 16(2)(a) of the Act;
(ii) Receipt of goods or services or both – Section 16(2)(b) of the Act;
(iii) Tax charged in respect of the supply has been actually paid to the Government – Section 16(2)(c) of the Act.
(iv) Furnished the return under Section 39 – Section 16(2)(d) of the Act;
6.10 The Appellant was not put on notice regarding the conditions violated while availing the ITC by the Appellant. The demand for reversal of ITC was only based on the mismatch of TOTAL ITC between GSTR 3B and GSTR 2A for the relevant period.
6.11 Mismatch between the ITC availed in GSTR 3B and ITC available in GSTR 2A alone will not create a liability of tax, as held by this Bench in the case of M/s Peekay Industries Vs Commissioner of Commercial Taxes, Karnataka (order dated 03.09.2026). It may provide a basis for initiating verification proceedings. In this case no such verification has been undertaken by the Adjudicating Authority at the invoice level. There were no findings by the Adjudicating authority that the excess ITC in GSTR 3B as compared to the ITC in GSTR 2A was because of the default in the hands of the suppliers. If there was a default, the defaulting suppliers had to be identified and their returns verified. This has not been done at the Adjudication level. The First Appellate Authority did not deal with this at all.
6.12 The question, then, is whether, without invoice-level verification and without identifying the mismatch, a demand for reversal of the excess of ITC in GSTR-3B over the auto-drafted GSTR-2A can be sustained.
6.13 In our view the difference between GSTR-2A and GSTR-3B alone cannot be a ground for denial of ITC in the hands of the receiver.
6.14 Here, the sole basis of the adjudication order or the impugned order to reverse the excess ITC availed by the Appellant in GSTR 3B is the information auto-drafted in the Form GSTR- 2A. The period is April 2018 to March 2019. There was no provision under the CGST Act, which provided for denial of ITC to the taxpayers on account of difference in figures of ITC between GSTR-3B and GSTR-2A. The demand based on mismatch of ITC in GSTR 3B with Form GSTR-2A does not affect the taxpayer’s eligibility to avail ITC on self-assessment basis, since reflection in the facility made available on the common portal was not, during that year, a condition for availing ITC.
6.15 Form GSTR-2A was provided for in Rule 60 of the Rules, read with Section 38 of the Act as it then stood, as part of the scheme of matching of invoices under Sections 38, 41 and 42. That scheme, and the return in FORM GSTR-2, were never brought into operation and finally Section 42 of the Act and Rule 69 of the Rules which dealt with matching of invoices were omitted with effect from 01.10.2022. During the period, therefore, Form GSTR-2A served only as a facility on the common portal.
6.16 Sub-rule (4) of Rule 36 of the CGST Rules was inserted with effect from 09.10.2019 by Notification No. 49/2019-Central Tax dated 09.10.2019 (and in the KGST Rules by the notification dated 30.10.2019). As originally inserted, it reads:
(4) Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37, shall not exceed 20 per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37.
6.17 Rule 36(4) was therefore linked to the requirement of invoice furnishing by the supplier under Section 37(1). Though there was no mention of the Form GSTR 2A in the Rule, GSTN created a facility at the receivers end to auto-draft the information received through GSTR 1 into a Form GSTR 2A even then, the law did not require the ITC in GSTR-3B to be matched with GSTR-2A. We have, however, no hesitation in holding that such auto-drafted data could be the source for the Respondent to initiate the examination and identify the lapses from the suppliers end to point out the failure of condition, if any, under Section 16(2)(c) of the Act.
6.18 The effect and purpose of Form GSTR-2A was explained by the Hon’ble Supreme Court in Union of India (UOI) Vs. Bharti Airtel Ltd. And Ors – 2021 (54) G.S.T.L. 257 (S.C.), wherein it was held that Form GSTR-2A was only a facilitator for taking an informed decision while doing self-assessment. The relevant portion of the judgment is extracted hereunder: 46. We need not multiply the authorities referred to in the concerned judgments, and cited before us, as in our opinion, these decisions have not dealt with the cardinal aspect of statutory obligation fastened upon the registered person to maintain books of accounts and record within the meaning of Chapter VII of the 2017 Rules, which are primary documents and source material on the basis of which self-assessment is done by the registered person including about his eligibility and entitlement to get ITC and of OTL. Form GSTR-2A is only a facilitator for taking an informed decision while doing such self-assessment. Non-performance or non-operability of Form GSTR-2A or for that matter, other forms, will be of no avail because the dispensation stipulated at the relevant time obliged the registered person to submit returns on the basis of such self-assessment in Form GSTR-3B manually on electronic platform. The provision contained in Section 39(9) of the 2017 Act and Rule 61 of the Rules framed thereunder, as applicable at the relevant time, apply with full vigor to the returns filed by the registered person in Form GSTR-3B. [Emphasis supplied]
6.19 At this juncture we would like to refer to the Circular No. 183/15/2022-GST dated 27.12.2022 issued by the CBIC. The Circular provided clarification to deal with difference in Input Tax Credit availed in FORM GSTR-3B as compared to that detailed in FORM GSTR- 2A for FY 2017-18 and 2018-19. The Para 4 of the Circular reads:
4. The proper officer shall first seek the details from the registered person regarding all the invoices on which ITC has been availed by the registered person in his FORM GSTR 3B but which are not reflecting in his FORM GSTR 2A. He shall then ascertain fulfilment of the following conditions of Section 16 of CGST Act in respect of the input tax credit availed on such invoices by the said registered person:
i) that he is in possession of a tax invoice or debit note issued by the supplier or such other tax paying documents;
ii) that he has received the goods or services or both;
iii) that he has made payment for the amount towards the value of supply, along with tax payable thereon, to the supplier.
6.20 Para 4.1 provides for the procedure to verify the condition of clause (c) of sub-section (2) of Section 16 of CGST Act, that tax on the said supply has been paid by the supplier. It provides for a certificate as proof that the supplier paid the tax. Where the difference for a supplier exceeds Rs. 5 lakh in the year, the certificate must come from a Chartered Accountant or Cost Accountant (paragraph 4.1.1). Where the difference is up to Rs. 5 lakh, a certificate from the supplier will do (paragraph 4.1.2).
6.21 The procedure prescribed under para 4.1 of the Circular 183/15/2022-GST should be undertaken by the Appellant only after they receive the details of the suppliers who found defaulted in payment of tax and therefore not found a place in FORM GSTR 2A of the receiver. No such details were shared with the Appellant or procedure was followed in the present case. The Circular, issued under Section 168(1) of the CGST Act, which applies to IGST by virtue of Section 20 of the IGST Act, binds the officers administering the demand, which is under the IGST head.
6.22 Therefore, the Order of Adjudication confirming the excess ITC based on the comparison of TOTAL ITC availed tax period basis during the year 2018-19 as compared to the TOTAL ITC available in the Form GSTR 2A tax period wise, without providing the invoice level mismatch will not sustain. Issue no (ii) is decided in favour of the Appellant.
7.1 The third issue is on merit. It is regarding the excess availment of ITC in Form GSTR 3B. The impugned order passed by the Appellate authority dismissed the Appeal filed by the Appellant for non-prosecution which in effect upheld the demand confirmed in the Order of Adjudication. It does not deal with the appellant’s reconciliation, the contention concerning B2BA amendments, the applicability of the law governing ITC during FY 2018-19, or the evidence said to have been placed on record.
7.2 There were two tables, as stated supra, that compared the ITC availed in GSTR 3B and ITC available in GSTR 2A auto-drafted during the Audit. The first table provided the month wise consolidated ITC availed and available. In the table the total ITC in GSTR 3B was Rs. 2,50,28,426.36 and in GSTR 2A was Rs. 1,91,63,730.86. The ITC in GSTR 3B in excess of ITC in GSTR 2A for the 12 months of FY 2018-19 worked out to Rs 58,64,695.50. In the Second table the consolidated ITC was split into and placed under three tax heads. The total ITC in GSTR 3B was Rs. 1,77,96,845.34 under IGST, Rs. 36,15,790.51 each under CGST & SGST; as against total ITC in GSTR 2A of Rs. 1,16,11,752.32 under IGST, Rs. 37,75,989.27 each under CGST & SGST. The difference of ITC was IGST of (+) Rs 61,85,093.02, under CGST of (-) Rs 1,60,198.76 and SGST of (-) Rs 1,60,198.76. The notice was issued only on the excess ITC under IGST. The issue thus narrowed down to a reconciliation of figures; the eligibility of the IGST ITC under Section 16 was never questioned.
7.3 The appellant’s reconciliation stated that its total ITC under IGST head appeared in the updated data for FY 2018-19 was Rs. 1,97,19,750, comprised Rs. 1,16,11,751 in the B2B data and Rs. 81,08,000 arising from B2BA amendments. Against this, the appellant claimed Rs. 1,77,96,845 in FY 2018-19. Thus, based on the appellant’s stated reconciliation, there was a short availment of Rs. 19,22,905, rather than excess availment. The Appellant also stated that Rs. 36,180 of IGST ITC relating to FY 2018-19 was availed in FORM GSTR-3B of April 2019, so that the total claimed for FY 2018-19 was Rs. 1,78,33,025, still less than Rs. 1,97,19,750.
7.4 The adjudicating authority rejected this reconciliation by referring to a July 2019 B2B extract recording IGST of Rs. 1,71,086, but did not examine the appellant’s specific reference of Rs. 81,08,000 that was reflected in the distinct B2BA (amendment table).
7.5 We have examined the particulars available in
(i) ‘All other ITC’ as per Table 4(A)(5) of FORM GSTR- 3B for the FY 2018-19 [IGST Rs. 1,77,96,845.34, Rs. CGST 36,15,790.51 and SGST Rs. 36,15,790.51]
(ii) Total amount of ITC as per B2B of FORM GSTR-2A (Table 8 A of GSTR-9)
(iii) Extract of B2B invoices of Table -8A of Form GSTR 9 for the FY 2018-19, with total IGST of Rs 1,16,11,752, CGST of Rs. 37,75,989.77, SGST of Rs. 37,75,989.82.
(iv) ITC of FY 2018-19 reflecting in B2BA (amendment table) of FORM GSTR-2A
(v) Extract of B2BA (Amendment) invoices of Form GSTR 2A for the month of July 2019 showing 9 invoices of M/s Inflow Technologies Pvt. Ltd. (GSTIN 33AAACW8310Q1Z1) with total IGST of Rs 81,08,000.43.
7.6 The above particulars were compared with the number indicated by the Appellant at various stages. The IGST ITC of Rs 1,16,11,752 was considered in the Audit note and in the SCN by the Respondent, whereas Rs 96,88,845 + B2BA of Rs. 81,08,000, total Rs. 1,77,96,845 considered in the Reply to SCN by the Appellant. Before the First Appellate Authority and before us, it was stated as Rs 1,16,11,751 + B2BA of Rs. 81,08,000, total Rs. 1,97,19,750. We find that the Appellant had consistently submitted that the shortage of ITC under IGST in GSTR 2A was due to non- consideration of B2BA Amendment invoices reported in July 2019. It was pertaining to 9 invoices from one supplier with a taxable value of Rs. 4,50,44,447 involving IGST of Rs 81,08,000. The invoices are dated between 03.04.2018 and 21.08.2018 (April, June and August 2018). As they were not reflected in the B2B table, they did not appear in the GSTR 2A for the FY 2018-19. On amendment through Table 9A of GSTR 1 of July 2019 these 9 invoices appeared in the updated GSTR 2A form 2018-19.
7.7 Since all the supporting documents were placed before us the DR was directed to very the correctness of the submissions made by the Appellant based on the supporting documents as mentioned supra from their side. The Ld DR appeared before us on 30th September 2026 and stated that the updated GSTR 2A was cross verified and found that the numbers are correct and now the total ITC availed in GSTR 3B for the year 2018-19 was well within the total ITC available in GSTR 2A auto-drafted for the said period. The FORM GSTR-3B for July 2019 shows IGST ITC of only Rs. 3,34,196.57 which confirms that the credit of these 9 invoices was not availed a second time in FY 2019-20.
7.8 Though these records were available before the Adjudicating Authority, the Adjudicating Authority relied only on the B2B table of FORM GSTR-2A for July 2019, which reflected ITC under IGST head of merely Rs. 1,71,086/-, and ignored the entries appearing in the B2BA (amendment) table for the same month. The ITC amounting to Rs. 81,08,000/-, as claimed by the Appellant, was duly reflected in the amendment table of FORM GSTR-2A for July 2019 and thus ought to have been considered. Had the Adjudicating Authority followed para 4 of Circular No. 183/15/2022-GST and called for the invoice-wise details, the B2BA entries would have come to light. Equally, had the Appellant replied to the audit observations and explained the B2BA position at that stage, with figures consistent with the audit data, this litigation could have been avoided.
7.9 Therefore, there was no excess availment of ITC under IGST head in Form GSTR 3B for the year 2018-19 as compared to the ITC available under IGST head in Form GSTR 2A as confirmed in the Order of Adjudication.
7.10 In view of the above, the demand of reversal of ITC of Rs 61,85,093 under IGST head confirmed in the Order of Adjudication and upheld in the impugned order which dismissed the Appeal will not sustain. Issue (iii) is decided in favour of the Appellant.
8.1 As the demand of reversal of input tax credit confirmed as excess fails, the interest under Section 50 and the penalty under Section 73(9) confirmed in the Order of Adjudication, and upheld by the impugned order, also fall. As the tax demand does not survive, no interest is payable, and the alternative plea for waiver of interest for the period from 22.11.2025 to 18.12.2025 does not arise. Issue (iv) is answered accordingly.
8.2 Issue (v), on relief, is answered in the paragraph that follows.
9.1 In the result, the appeal is allowed and we order as follows:
(i) The Order of Adjudication dated 06 April 2024 along with summary in FORM GST DRC 07 dated 06 April 2024 and the Impugned Order in Appeal dated 18 August 2025 along with summary of demand in FORM GST APL 04 dated 21 August 2025 are set aside.
(ii) The demand of reversal of ITC under the head IGST of Rs 61,85,093 availed in GSTR 3B for the year 2018-19 considered as excess as compared to the ITC available in GSTR 2A is set aside along with interest confirmed under Section 50 of the Act and penalty imposed under 73(9) of the Act.
(iii) The Appellant shall be entitled to consequential relief in accordance with law
(iv) There shall be no order as to costs.
Order pronounced on 12 November 2026.
